American cities have been losing middle-class population, a new research has revealed.
In a 2000 to 2014 analysis conducted by the Pew Research Center, middle-income households declined from 229 to 203, a 6 percent drop in 53 cities.
An earlier analysis of the agency proposed that the decline in middle-class population can be attributed to the fact that some metropolitan areas are losing a great percentage of their localities.
The present analysis, however, shows that there is also a relative increase in the households from the upper and lower income tiers. Shrinking numbers of middle class may mean that there is an economic shift to either low-income class or upper-income class.
Economic Status Shift
An analysis of metropolitan areas shows that changes in economic forces are in place.
Take Goldsboro, North Carolina, for instance, where the number of middle-income adults fell by 12 percent - the biggest reduction among the cities analyzed. Goldsboro also had an increase in low-income households from 27 percent to 41 percent.
Shift in economic status is also evident in Midland where most of the middle-class households experienced financial gains brought about by the boom in the oil and energy industries. The middle-class families from 2000 to 2014 decreased from 53 percent to 43 percent, while upper-income families ballooned to 37 percent in 2014 from a previous 18 percent in 2000.
Overall, middle-class households have shown a significant decline, while lower and upper income brackets increased.
Why does it matter that middle-class households are shrinking?
Middle-class families are common in areas where household incomes are fairly distributed among all types of households. Without them, there would be an increase in the gap between lower- and upper-income households, which signifies income inequality.
Out of the 229 cities studied, 119 were considered to be winners as more households had improved their economic status, while 110 were losers.
"The share of people in the lower-income tier or the upper-income tier were on the rise in the vast majority of metropolitan areas," said Rakesh Kochhar, associate director of research at Pew Research Center. "We observed nationally a polarization of Americans into opposite sides of the income distribution."
The Middle-Income Households Defined
Based on the report, Americans who belong in the middle-income stratification are those whose annual earnings are two-thirds to twice of the national median, after household size adjustment.
The definition of middle income depends on the household size because it is computed based on the amount that would be able to support the lifestyles of those in the households. For instance, a five-person household needs to have an annual income range of $54,000 to $161,000 to be labeled as a middle-income household, whereas a one-person household only needs $24,000 to $72,000 annual income to be included in the group.
In 2014, the middle-income range was set between $42,000 and $125,000 yearly for a household of three members.
Check if you belong to the middle class using the Pew Research Center income calculator.
Photo: Nicolas Vigier | Flickr